Future directions in financial sustainability & asset management

An interview with Gregory Davoren, Deputy General Manager, Brighton Council, Tasmania

Q. What opportunities can be embraced by Local Governments in the asset management and financial sustainability field?

Effective asset management is all about maximising asset life at minimal cost. Effective asset management improves financial sustainability.

Opportunities exist for councils to provide expertise in asset management to neighbouring councils and those further afield through shared resources and contractual services. Contractual service is emerging as a more transparent and successful method of service delivery and support between councils than the traditional shared service model. Contractual service may also be extended to provide financial sustainability planning through 10 year planning and the trend towards up to 40 year planning. Linkage of asset management planning to financial planning requires a specialist skill that is not always present in many small to medium sized councils.

Q. What threats face Local government and how can councils deal with these?

There always has, and always will be an increasing expectation from ratepayers for improved quality of service and infrastructure assets; but improvements must be delivered without a real increase in rates and charges. This can only be achieved through efficiency gains or external revenue streams.

On top of this continuous expectation, Local Government is undergoing a period of significant change. Local Government now faces competing interests as we shift from asset managers to a greater emphasis on human services. The increased expectations and human emphasis shift will create a more challenging financial sustainability environment than previously faced by councils.

Q. Where do you see Local Government management going in the next 20 years?

The shifting environment in Local Government from asset managers to include more human services with limited funding will place a greater emphasis on diversity and need for quality management. A greater prominence on financial sustainability will emerge due to competing demands. Local Government performance will be benchmarked against other councils with performance incentives, similar to those offered by large private companies to attract and reward successful managers. The line between private and public sector employment conditions and practises will diminish as we all compete for a limited resource expertise pool.

Q. What do you see as the next big thing?

We are already starting to see the emergence of entrepreneurial councils. Sydney Council has amassed a massive property portfolio with the income generated from this investment used to secure their long term financial sustainability. Other councils such as Lake Macquarie City Council which recently formed a business unit (Lakemac Enterprises), have been providing services to other councils in the areas of fleet management, printing and graphic design, planning and safety services.

Brighton Council has established its own Proprietary Limited Company to provide Local Government expertise ranging from general management, IT, rating, corporate management, planning and regulatory functions. Whilst only a small council, Brighton has also been very successful in partnering with Microsoft, Eclipse Computing and Point Duty to develop and support our own Local Government and water utility software solution – Council Point. Brighton Council software is deployed in over 30 councils and several water authorities across three states and two countries. Last year external income to Brighton Council equalled 20 per cent of our rate income.